Should you buy life insurance directly or use a broker? Compare the pros and cons, understand how brokers get paid, and when each option makes sense.
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Australians have more options than ever when buying life insurance: direct online applications, comparison websites, industry super funds, and insurance brokers. With so many choices, how do you know which path is right for you?
The honest answer: It depends on your situation.
Direct insurance (buying straight from an insurer or comparison site) works well for some people. For others, the expertise of a broker can mean the difference between approval and rejection, or between paying 40% more and getting optimal rates.
This guide breaks down exactly when each option makes sense, how brokers actually get paid, and what to look for if you decide to work with one. We will cover the real advantages and limitations of both approaches, backed by data from Australian insurers.
Important: This article provides general information only. Your circumstances are unique, and the best approach depends on your health, occupation, family situation, and coverage needs.
Before comparing options, let us clarify what each term means in the Australian market.
Direct insurance means buying a policy without personalised advice. You:
Common direct channels:
Advised insurance involves a licensed financial adviser or insurance broker who:
Types of advisers:
| Feature | Direct Insurance | Through a Broker(Recommended) |
|---|---|---|
| Personal Advice | No (general information only) | Yes (tailored recommendations) |
| Product Comparison | Limited to one insurer or platform | Multiple insurers compared |
| Application Support | Self-service online/phone | Guided, with help on disclosure |
| Underwriting Advocacy | None - standard process | Active - can negotiate with underwriters |
| Cost to Consumer | No fees (commission in premium) | No fees (commission-based) |
| Time Investment | Lower - quick online application | Higher - detailed consultation |
| Best For | Simple, straightforward cases | Complex needs, pre-existing conditions |
| Limitations | No support for complex situations | May feel sales-oriented |
Both options have embedded commissions in premiums. The key difference is the level of service and expertise you receive.
Direct insurance is a perfectly valid choice for many Australians. If your situation is straightforward, you may not need professional advice.
1. You Are in Excellent Health
Why it works: Standard rates apply, no complex underwriting required, and the application is simple.
2. You Have a Standard Occupation
Why it works: No occupation loadings or exclusions to navigate.
3. Your Coverage Needs Are Simple
Why it works: Standard products meet your needs without customisation.
4. You Are Comfortable Making Financial Decisions
Why it works: You do not need someone to explain options or guide decisions.
Speed: Online applications can be completed in 15-30 minutes. Some insurers offer instant decisions for simple cases.
Control: You research at your own pace, on your own schedule.
No sales pressure: No meetings or phone calls if you prefer digital interaction.
Potentially lower commissions: Some direct products have lower embedded commissions, though this varies. The savings are typically modest (5-10% at most).
No personalised advice: You are responsible for determining appropriate coverage amounts and types.
Limited comparison: Most direct channels only show their own products.
Standard underwriting only: If your application triggers detailed assessment, you may be declined without the opportunity to provide context.
No advocacy: If underwriters have questions, you navigate this alone.
Disclosure responsibility: Missing or incorrect information can void your policy at claim time - a serious risk without professional guidance.
Take our quick assessment to determine whether direct or advised insurance suits your situation. No obligation, takes 2 minutes.
Start AssessmentWhile direct insurance works for simple cases, many Australians have situations that benefit significantly from professional advice. Here is when a broker adds genuine value.
Why brokers matter: Different insurers treat the same condition very differently. A broker can identify insurers more likely to accept your application and present your health history in the most favourable light.
Conditions requiring broker expertise:
Real impact: For a 42-year-old with Type 2 diabetes (HbA1c 6.8%), we have seen premium variations of 40%+ between insurers for identical coverage. One insurer declined; another offered 50% loading; a third offered 75% loading. The broker found the 50% loading option the client would not have discovered going direct.
For detailed information on how specific conditions affect coverage, see our comprehensive guide: Medical Conditions and Life Insurance in Australia.
Pre-assessment advantage: Good brokers offer "Stage 3.5" pre-assessment - anonymously testing insurer appetite before formal application. This reduces rejection rates from 45% to 30% and prevents declined applications appearing on your record.
Occupations requiring broker expertise:
Why it matters: Occupation loadings vary dramatically between insurers. A construction site supervisor might pay 25% more with one insurer and 75% more with another. Brokers know which insurers are most competitive for specific occupations.
Exclusions to navigate: Some insurers exclude specific occupational activities (heights over certain levels, use of certain equipment). A broker ensures you get coverage that actually protects your work activities.
For more details, see: Life Insurance for High-Risk Occupations.
Complex situations include:
Business insurance:
Family situations:
High net worth:
Multiple policies:
Why brokers matter: These situations require tailored structures that direct products cannot accommodate. Policy ownership, beneficiary nominations, and coverage coordination all affect outcomes.
A broker can help by:
Important: Previous declines must be disclosed to new insurers. A broker helps frame this context appropriately.
Brokers provide:
Value of comparison: Policy definitions matter as much as price. A cheaper policy with "Any Occupation" TPD definition may never pay out for your profession, while a slightly more expensive "Own Occupation" policy provides genuine protection. Brokers explain these critical differences.
For a detailed comparison of policy features, see: Retail vs Super Life Insurance.
Understanding broker compensation helps you evaluate their advice. Australian regulations require disclosure, but let us break down exactly how it works.
Initial commission: Brokers receive an upfront payment when your policy is issued, typically:
Example: On a $200/month life insurance policy ($2,400 annual premium), a broker might receive $1,680-$2,160 as initial commission.
Ongoing commission: Brokers receive annual payments while your policy remains active:
Example: On that same $200/month policy, ongoing commission is approximately $360-$600 per year.
You do not pay the broker directly. Commissions are embedded in the premium charged by insurers. Whether you go direct or through a broker, the premium you pay typically includes commission.
Direct products: Some have lower embedded commissions, though many do not. The difference is usually modest (0-10%).
Why commissions exist: Insurers pay commissions because advised business typically:
Higher commission insurers: Some insurers pay higher commissions. Ethical brokers prioritise your interests regardless of commission, but this is worth understanding.
Questions to ask your broker:
Regulatory protections:
Some advisers charge fees instead of (or in addition to) commissions:
When fee-for-service makes sense:
Most Australians: Commission-based advice works well and means professional advice at no direct cost.
| Feature | Commission-Based(Recommended) | Fee-for-Service |
|---|---|---|
| Upfront Cost to You | $0 (embedded in premium) | $2,000-$5,000+ direct fee |
| Initial Commission | 60-90% of first year premium | None or rebated |
| Ongoing Commission | 15-25% annual | None or rebated |
| Incentive Alignment | Long-term relationship | Project-based |
| Best For | Most Australians | High net worth, complex needs |
Both models can work well. Commission-based means no out-of-pocket cost; fee-for-service eliminates commission incentives.
If you decide to work with a broker, here is how to find one who will genuinely serve your interests.
1. Specialisation in Risk Insurance
Look for brokers who focus on life insurance, TPD, trauma, and income protection rather than generalists who also do investments, super, and mortgages.
Why: Risk insurance underwriting is complex. Specialists understand insurer preferences, policy definitions, and how to navigate pre-existing conditions.
2. Access to Multiple Insurers
Ensure your broker compares products from at least 6-8 insurers. Ask which insurers they work with.
Red flag: Brokers who only recommend one or two insurers may have restricted agreements or limited expertise.
3. Relevant Experience
Ask about experience with situations like yours:
4. Clear Communication
A good broker explains:
5. Written Advice (Statement of Advice)
For personal advice, brokers must provide a Statement of Advice (SOA) documenting:
6. Proper Licensing
Verify your broker is:
Check here: ASIC Financial Advisers Register
About their practice:
About your situation:
About fees and process:
Pressure tactics: Good brokers never rush you into decisions.
Limited options: Be wary if only one or two products are presented.
Vague explanations: You should understand why recommendations are made.
No written advice: Personal advice requires documentation.
Dismissing your questions: A professional welcomes questions about their recommendations.
Promising unrealistic outcomes: No broker can guarantee approval or specific terms.
At IMFL, we believe every Australian deserves access to professional insurance advice, regardless of their health history or occupation.
1. Pre-Assessment First
Before submitting formal applications, we assess your insurability through our Stage 3.5 pre-assessment process:
Result: Rejection rates reduced from 45% to 30% for complex cases.
2. Comprehensive Comparison
We compare products from major Australian insurers:
3. Specialist Focus
Our team specialises in complex cases:
4. Transparent Process
We explain:
5. Ongoing Support
Insurance is not "set and forget":
Our advisers specialise in complex cases. Discover your options with no obligation. Free assessment, whether you proceed with us or not.
Start Free AssessmentHere is a simple framework to decide between direct insurance and working with a broker.
Start with a conversation. Most brokers offer free initial consultations. You can:
There is no obligation. A good broker will tell you if direct insurance suits your needs - it is not in their interest to waste time on cases that do not need advice.
Most do not. The majority of Australian insurance brokers are compensated through commissions paid by insurers, not fees charged to you. The commission is embedded in the premium, which is similar whether you go direct or through a broker.
Some advisers offer fee-for-service arrangements (typically $2,000-$5,000) where commissions are rebated. This can make sense for very high coverage amounts but is unnecessary for most Australians.
Usually not. Premiums are set by insurers based on your risk profile, not by how you apply. The commission component exists in both direct and advised products.
In many cases, brokers achieve better outcomes:
Net result: For complex cases, broker advice often results in lower premiums despite commission.
Yes, this is where brokers add significant value. A previous decline does not mean you are uninsurable. Different insurers have different underwriting philosophies, and a broker can:
Important: Previous declines must be disclosed. A broker helps frame this appropriately.
Typical timeline:
Total: 4-8 weeks from initial contact to policy issue for complex cases. Simple cases can be faster.
Direct insurance: You contact the insurer directly and navigate the claims process yourself.
Through a broker: Your broker assists with the claim:
Claims support is one of the most valuable broker services. During a difficult time (death, disability, serious illness), having professional support navigating the process is invaluable.
Yes, though it may involve new underwriting. If your health has changed since your direct policy was issued, the new application may result in:
Better approach: Consider the right channel from the start. If there is any chance you will benefit from advice, starting with a broker avoids re-underwriting later.
Ask directly:
Good brokers welcome these questions and provide transparent answers.
The choice between direct insurance and working with a broker is not about one being "better" than the other. It is about matching the right approach to your situation.
Direct insurance works when:
Brokers add genuine value when:
The cost is similar either way - commissions are embedded in premiums regardless of channel. The question is whether you need the expertise, advocacy, and support that brokers provide.
If you are unsure, start with a conversation. A good broker will tell you honestly whether you need their services or whether direct insurance suits your needs perfectly well.
What matters most: Getting the right coverage in place. Whether direct or advised, the important thing is protecting yourself and your family with appropriate life insurance.
General Advice Only
Authorised Representative Number: 1244847 | Australian Financial Services Licence: 246623